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CEO compensation and bank efficiency: An application of conditional nonparametric frontiers

Matousek, Roman, Tzeremes, Nickolaos G. (2016) CEO compensation and bank efficiency: An application of conditional nonparametric frontiers. European Journal of Operational Research, 251 (1). pp. 264-273. ISSN 0377-2217. (doi:10.1016/j.ejor.2015.10.035) (KAR id:55858)

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Official URL
http://dx.doi.org/10.1016/j.ejor.2015.10.035

Abstract

The paper investigates in a dynamic context the effect of Chief Executive Officer (CEO) bonus and salary payments on banks’ technical efficiency levels. Our methodological framework incorporates the latest developments on the probabilistic approach of efficiency measurement as introduced by B?din et al. (2012). We apply time-dependent conditional efficiency estimates to analyse a sample of 37 US banks for the period from 2003 to 2012. The empirical evidence reveals a non-linear relationship between CEO bonus and salary payments and banks’ efficiency levels. More specifically it is reported that salary and bonus payments affect differently banks’ technological change and technological catch-up levels. Finally, the empirical evidence suggests that higher salary and bonus payments are not always aligned with higher technical efficiency levels.

Item Type: Article
DOI/Identification number: 10.1016/j.ejor.2015.10.035
Uncontrolled keywords: Bank efficiency; CEO compensation; Conditional efficiency measures; Data envelopment analysis
Subjects: H Social Sciences > HG Finance
Divisions: Divisions > Kent Business School - Division > Kent Business School (do not use)
Depositing User: Roman Matousek
Date Deposited: 23 Jun 2016 21:01 UTC
Last Modified: 23 Mar 2021 13:01 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/55858 (The current URI for this page, for reference purposes)
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